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Trading Chart Patterns: Why Cleaner is Better

Gut feel [1] comes with experience, but the only problem is that it’s based on feel. That means that discretionary trades which are based on feel are subject to your moods. So, whether you’ve been on a hot streak, a cold streak, you’re distracted or just plain tired, your trading method itself will vary. We all see results vary from time to time, but our method should only vary when we want it to!

I’m a chart pattern [2] trader, there’s no doubt about it. Almost all of my trades are based on the charts, and for a few good reasons. Some time ago, I outlined the reasons why I use technical analysis [3], but here are the two biggest reasons why my trades come from chart patterns:

There’s no incredible magic about how clean or ‘tight’ the pattern itself is in terms of reliability, but there is some real substance in knowing exactly at which point in time you should be IN or OUT of a trade. That is of course derived from the chart pattern itself. A breakdown from a well-defined bull flag [4] or ascending triangle [5] pattern gives me a specific exit plan, and that puts me well ahead of the curve by telling me it’s time to step aside and move to cash [6], or simply shift those funds into a new setup [7].

This is the basis of our swing trading [8] at TheStockBandit.com. We locate the chart patterns for our members and then explain why the stock is a trade candidate to begin with. Every single trade is provided with a specific entry level, a stop loss, and typically two profit targets so that we can scale out of the trade and take profits into strength [9] (with price projections also being based on the chart patterns).

If you aren’t trading the cleanest patterns in the market, maybe it’s time you should. Check out our free trial [10] today, and put some consistency into your method!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com [11]